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CONTRACT FOR THE SUPPLEMENTARY LOAN FOR THE PURPOSE OF COMPLETING THE LINE FROM PEKING TO HANKOW, AUGUST 13, 1905. [Translation from French text as printed in Wang's "Railway Loan Agreements,' p. 73.]

Between the undersigned:

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First. The Imperial Chinese Railway Co. represented by His Excellency Sheng Hsuan-huai Kung Pao, director general, duly authorized by the Chinese Government, Second. The Société d'Étude de Chemins de Fer en Chine, represented by M. Jean Jadot, engineer in chief, director of the line from Peking to Hankow, holding full

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ARTICLE I. To assure the completion in good time of the line from Peking to Hankow and of its branches, and also to assure the payment of interest on the loan, until the whole line has been put into operation, the two contracting parties have decided to issue a supplementary 5 per cent gold loan, at the issue price of 90 per cent, to the nominal amount of 12,500,000 francs, represented by 25,000 bonds of 500 francs each. ART. II. This loan is subject to all the clauses and conditions of the principal 5 per cent loan contract, under date of June 26, 1898, and of the operating contract annexed thereto, especially as regards the rate of interest, period, amortization, etc.

ART. III. This loan, like the principal loan, has the guaranty of the Chinese Government; and it has, furthermore, as a special guaranty, the net revenue from the operation of the Peking-Hankow line, including the extension from Lukowkiao to Peking, and the branches forming part of the same system, after deduction of the sums necessary to assure the services of the principal loan of 1898.

ART. IV. The purpose of the present supplementary loan being to assure the completion of the whole line, every effort will be made to avoid exceeding it. If, however, after the completion of the line toward the close of 1905, besides the ordinary expenses of upkeep and current repairs, and besides the service of the loan and the deduction of 10 per cent for rebuilding or extraordinary repairs (according to article IV of the operating contract)-expenses which will be covered by the operating revenues— there are expenses to be incurred for the final work or orders for new material, or any extension works whatsoever expenses which (according to article II of the operating contract, and according to the rules generally adopted in railway business) should be charged to the capital account-these expenses will be covered by that share of the net profits which should accrue to the Imperial Chinese Railway Co.; if that share should not suffice to cover these expenses, the Imperial Chinese Railway Co. should, of course, in conformity with the operating contract, furnish the funds to cover them. These expenses can only be incurred after a previous agreement with the director general or his delegate.

ART. V. After the completion of the whole line the operating service will become more and more important. The Imperial Chinese Railway Co. has named a delegate who (in conformity with article II of the operating contract) should examine in advance, with the delegate of the Société d'Étude de Chemins de Fer en Chine, all measures for the purpose of assuring the perfect organization of the various services and see to the proper execution of those measures, the Société d'Étude de Chemins de Fer en Chine being charged by the Chinese Government with the operation of the line, by virtue of the operating contract.

ART. VI. If, in the future, the construction of new branches is decided upon, the Imperial Chinese Railway Co. must furnish the necessary funds, either by means of its share of the net profits, or otherwise. The Imperial Chinese Railway Co. will be free to choose such means as it sees fit.

ART. VII. The present contract is drawn up in four copies, one of them for the Chinese Government, one for the Imperial Chinese Railway Co., one for the legation of Belgium in Peking, and one for the Société d'Étude de Chemins de Fer en Chine. In case of doubt or difference, the French text alone will be authoritative for the interpretation of the contract.

ART. VIII. When the contract shall have received imperial sanction, the Ministry of Foreign Affairs (Waiwupu) will give instructions by telegraph to His Excellency the Minister of China, in Brussels, for the signature of the 25,000 bonds for the loan, in the name of the Chinese Government.

Notice of the imperial sanction and of the instructions given to the Chinese minister at Brussels will be given by the Waiwupu to the minister of Belgium in Peking. If the minister of Belgium requests it of the Waiwupu, the latter will advise the minister of such foreign country as may be designated to him as taking a part in the subscription for the bonds.

Done at Peking, August thirteenth, nineteen hundred and five.

J. JADOT.
SHENG.

Appendix 4. PEKING-NEWCHWANG RAILWAY.

PRELIMINARY AGREEMENT BETWEEN THE HONGKONG & SHANGHAI BANKING CORPORATION AND DIRECTOR GENERAL HU, RESPECTING THE PEKING-NEWCHWANG RAILWAY LOAN.

This is a preliminary agreement made between His Excellency Hu, Governor of Peking and administrator general of the Imperial Railways of North China within and without the Great Wall, hereinafter called the administrator general, of the one part, and the Hongkong & Shanghai Banking Corporation, representing a British syndicate, hereinafter called the syndicate, of the other part.

1. The syndicate is hereby authorized by the administrator general to make arrangements to float and issue, on behalf of the Railway Administration, on the best terms obtainable on the market, a sterling loan for the equivalent of about 16,000,000 taels, for the construction of a railway line from Chunghousou to Hsinmingtien, and a branch line to Yingtzu, and for the redemption of existing loans to the TientsinShanhaikwan and Tientsin-Lukowkiao lines.

2. The security for the loan shall be the permanent way, rolling stock, and entire property, together with the freight and earnings of the existing lines between Peking, Tientsin, Tangku, and Chunghousou, and also of the proposed new lines when constructed, in addition to the rights of mining coal and iron, which will be retained by the Railway Administration on each side of the proposed new lines, for a distance to be determined. In the event of default or arrears in payment of interest or payments of principal, the said railway lines and mines shall be handed over to representatives deputed by the syndicate, to manage them on their behalf, until principal and interest of the loan are redeemed in full, when the management will revert to the Railway Administration.

It will, however, be provided that if such arrears are for a small sum, and it appears desirable to the syndicate to extend the due date of their payment for a term not exceeding three months, it shall be open to the syndicate to do so.

In the event of any special circumstances arising, necessitating the introduction of important changes by the management aforesaid, these changes shall be effected in consultation with the administrator general, and in the best interests of the railway. In the case of war or famine, troops and grain will be transported over the line on terms to be arranged hereafter.

No further loan, charge, or mortgage shall be charged on the security named above until this loan is redeemed.

3. During the currency of the loan the principal members of the railway staff shall be capable and experienced Europeans, who shall be, as at present, appointed by the administrator general of the railway, and may be, in the event of their misconduct or incompetency, dismissed, after consultation with the chief engineer. If there are Chinese with sufficient engineering or traffic experience, they may be appointed as well as Europeans. Should it be necessary to appoint a new chief engineer, such appointment shall be made in consultation with the syndicate.

In addition to above, a capable and experienced European railway accountant shall be appointed to inspect all the accounts of the railways.

All receipts and earnings of the lines herein specified shall be paid in to the credit of the Railway Administration with the Hongkong & Shanghai Banking Corporation, Tientsin, together with 50,000 taels annually payable under the Board of Revenue's arrangement, approved by the Throne, by each of the Provinces of Shansi, Shensi, Honan, and Anhwei, for the railway purposes for 10 years.

All expenses of repairing and maintaining lines will be paid from this account, the remainder of which shall then be charged with the service of this loan.

4. The rate of interest, price, term of years, and other particulars shall be left to the syndicate to arrange, on the best terms possible, on the market, when the moment appears favorable for floating the loan. Installments of proceeds will be arranged as far as possible to suit the progress of construction and the requirements of the administrator general, interest being calculated from the date of such payments. The loan will be redeemable by the annual drawings to be scheduled in the final agreement. Besides the drawings so scheduled the administrator general may from

time to time, on giving due notification to the syndicate, call for extra drawings to be held, bonds so drawn being redeemed by the Railway Administration at 20 per cent premium on their par value.

5. If it shall be found that the loan can not be floated without the introduction of some special attraction, the administrator general shall memorialize the Throne, recommending that a concession of mining rights be granted to the syndicate at a point or points on the lines, and on terms to be arranged with the syndicate on the basis of the mining regulations newly established by the Tsung Li Yamen. The requests of the syndicate will be confined to mines within a distance of 5 li of the railway. 6. The date of issue of this loan shall be left to the discretion of the syndicate, to be fixed in accordance with the state of the market, but should it be found impossible to issue it before the 1st day of October next, the syndicate will arrange to advance to the administrator general, on or about that date, an installment of about 2,000,000 taels on account of and repayable out of the proceeds of the loan when floated. The terms of this advance shall be left to the arrangement of the syndicate on the best terms obtainable, interest not to exceed the rate of 54 per cent per annum, and the syndicate shall be authorized to issue temporary bonds for the amount if required. 7. For the satisfaction of the investing public who are unacquainted with China a satisfactory report will be required from the district engineer, Mr. J. Ginnell, as to the condition and earning power of the old lines, and as to the route, prospects, and mineral wealth of the new lines to be constructed, and Mr. Ginnell shall be instructed by the administrator general to proceed to London as soon as possible after the signing of this preliminary agreement, to confer with the syndicate on these matters.

8. The terms of this preliminary agreement will, immediately after signature, be submitted by the administrator general to the Throne for sanction by the imperial edict, which shall be officially communicated by the Tsung Li Yamen to the British minister in Peking.

9. Three months from the date of signature of this preliminary agreement shall be allowed to the syndicate to accept or decline its terms. Upon their confirmation by the syndicate, this preliminary agreement shall be replaced by a definite agreement, providing for all details.

Signed at Peking, this 7th day of June, 1898, being the 19th day of the 4th moon of the 24th year of the Emperor Kuang Hsu.

(Seal of Administrator General of Railways within and without the Shanhaik wan boundary.)

For the Hongkong & Shanghai Banking Corporation.

(Signed.)

E. G. HILLIER, Agent. DEFINITE AGREEMENT BETWEEN THE BRITISH & CHINESE CORPORATION (LTD.) AND DIRECTOR GENERAL HU, RESPECTING THE PEKINGNEWCHWANG RAILWAY LOAN.

This agreement is made between His Excellency Hu, Governor of Peking, as administrator general of the railways of North China within and without Shanhaikwan, acting under the authority of the Imperial Chinese Government, hereinafter called the administrator general, of the one part, and the Hongkong & Shanghai Banking Corporation, for themselves and on behalf of the British firm of Jardine, Matheson & Co., representing as joint agents the British & Chinese Corporation (Ltd.), hereinafter called the corporation, of the other part:

Whereas, on the 7th day of June, 1898, being the 19th day of the 4th month of the 24th year of the Emperor Kuang Hsu, a preliminary agreement was signed at Peking between the administrator general and the Hongkong & Shanghai Banking Corporation, representing a British syndicate, for a sterling loan for the equivalent of about 16,000,000 taels for the construction of a railway from Chunghousou to Hsinmingting and a branch line to Yingtzu, and for the redemption of existing loans made to the Tientsin-Shanhaikwan and the Tientsin-Lukowkiao Railway lines; and

Whereas, the Hongkong & Shanghai Banking Corporation, before the expiration of the period named, duly notified the administrator general that it is prepared, with certain modifications, to arrange the issue of the loan upon the conditions named in the preliminary agreements:

1. The corporation agrees to issue on behalf of the administrator general a sterling lean for the amount of £2,300,000, the proceeds of which are to be applied in the order following:

(a) To the redemption forthwith or at maturity of the loans and advances specified in the statement attached to this agreement which have been made by foreign banks to the Tientsin-Shanhaikwan and the Tientsin-Lukowkiao Railway lines. The administrator general hereby certifies that the total amount of the liabilities due by the lines named does not exceed the sum of 3,000,000 taels.

(b) To the carrying out, within a period of three years from the date of this agreement, of certain improvements and additions to rolling stock of the existing lines between Peking and Shanhaikwan, recommended by the European chief engineer, and estimated by him to cost about 1,500,000 taels.

(c) To the construction of a railway line from Chunghousou to Hsinmingting, and one from a point on that line near Shihsanchan to Yingtzu, and of a branch line from Nuerhho to the collieries of Nanpiao.

The administrator general engages that the construction of the new lines here specified shall be completed within a period of three years from the date of this agreement. 2. In the event of the proceeds of this loan being insufficient for the completion of the new lines here specified, the administrator general will provide or will arrange with the Imperial Government of China to provide funds from other sources sufficient to complete their construction.

3. This loan shall be a first charge upon the security of the permanent way, rolling stock, and entire property, with the freight and earnings of the existing lines between Peking and Shanhaikwan, and on the freights and earnings of the new lines when constructed. The administrator general shall, during the continuance of this loan, maintain the railway buildings, works, rolling stock, and dependencies in good order and condition, and shall increase the rolling stock from time to time to such extent as shall be necessary for the requirements of traffic.

Should it be decided hereafter to construct branch lines or extensions connecting with the lines herein named, their construction shall be undertaken by the Railway Administration, and should the funds of the Railway Administration be insufficient for that purpose, it shall apply to the corporation for the same.

4. The principal and interest of this loan are guaranteed by the Imperial Government of China, and in the event of default in payment of interest or repayment of principal at due date, the corporation shall immediately notify the Imperial Government of China thereof, and the Imperial Government of China will thereupon provide the funds necessary to meet such payments in sterling in London. In the event of the Imperial Government of China being unable to provide the funds necessary to meeting a payment of interest or principal when called upon by the corporation to do so, in terms of this clause, the said railway lines and entire property shall thereupon be handed over to representatives deputed by the corporation to manage, on their behalf, until principal and interest of the loan have been redeemed in full, when the management will revert to the Railway Administration. It is provided that should arrears of interest or principal be for a small sum, and it appear desirable to the corporation to extend the due date of their payment for a term not exceeding three months, it shall be open to the corporation to do so.

This arrangement, which differs from other contracts in that the administrator general retains control of the railway lines so long as the principal and interest of this loan are regularly paid, has been agreed to in consequence of the friendly relations which have long existed between the contracting parties.

5. No further loan shall be charged upon the security named above, except through the corporation, until the loan is redeemed; and the Tsung Li Yamen will hand to the British minister in Peking a written undertaking on behalf of the Imperial Government of China, that the railway lines named in this agreement shall never be alienated or parted with.

6. During the currency of this loan the chief engineer of the railways shall be a British subject. The principal members of the railway staff shall be capable and experienced Europeans, who shall be, as at present, appointed by the administrator general of the railways, and may be, in the event of their misconduct or incompetency, dismissed after consultation with the chief engineer.

If there are Chinese with sufficient engineering or traffic experience they may be appointed as well as Europeans.

Should it be necessary to appoint a new chief engineer such an appointment shall be made in consultation with the corporation.

In addition to the above, a capable and efficient European railway accountant shall be appointed, with full powers to organize and direct the keeping of the railway accounts, and to act with the administrator general and the chief engineer of the railway in the supervision of receipts and expenditures.

7. The railway lines named in the agreement being Imperial Government lines, in the event of war or famine Chinese Government troops and grain may be transported over the lines free.

8. All receipts and earnings of the lines herein specified shall be paid into the credit of the Railway Administration with the Hongkong & Shanghai Banking Corporation, Tientsin, together with 50,000 taels annually payable, under the Board of Revenue's arrangement approved by the Throne, by each of the Provinces of Shansi, Shensi, Honan, and Anhwei, for railway purposes for 10 years.

All expenses of working and maintaining the lines will be paid from their receipt, and earnings, the remainder of which, together with the provincial funds above nameds shall then be charged with the service of this loan. Payments of interest and repayments of principal shall be made in equal monthly installments, and in accordance with the amounts and dates of a yearly schedule which will be furnished to the administrator general by the bank. These payments shall be made by the administrator general to the Hongkong & Shanghai Banking Corporation, Tientsin, in Hongping sycee sufficient to provide the sterling amount due to the bondholders in terms of the prospectus of the loan, the rate of exchange for these payments being fixed by that bank as each such payment becomes due. In reimbursement of expenses incurred in connection with the distribution of the service to bondholders of the principal and interest of the loan, the Hongkong & Shanghai Banking Corporation, Tientsin, shall receive from the Railway Administration a commission of per cent on the annual loan service which will be included in the yearly schedule for the same.

9. The term of the loan shall be 45 years, and subject to the modification mentioned hereinafter, repayment of the principal shall be made, so far as regards the bondholders, in 40 equal annual installments commencing with the sixth year.

10. Interest on the loan shall be charged at the rate of 5 per cent per annum on the nominal principal and shall be calculated on the balance of such principal at any time outstanding, payments of interest being made by the administrator general in accordance with the amounts and dates specified in the yearly schedule to be provided. 11. The loan will be redeemed by annual drawings in London, as provided for in the prospectus. Besides the drawings as provided for, the admistrator general may, on giving three months' notice to the corporation, call for extra drawings to be held for any amount. Bonds so drawn to be redeemed by the Railway Administration at 20 per cent premium on their par value. Any such extra drawings must take place on the date of the ordinary drawing provided by the prospectus.

In the event of such extra drawings taking place, subsequent payments of interest will be adjusted in the yearly schedule to be provided, but the repayments of principal shall continue unaltered in terms of clause 9 of this agreement until the loan is redeemed.

The Imperial Government of China hereby engages that this loan shall not be redeemed or converted otherwise than as herein provided.

12. The price agreed upon for this loan is 90 per cent net of the nominal principal, but should an unfavorable state of the market prevail at the time of issuing the prospectus the corporation is herby authorized to reduce the price of the loan, at its own discretion, to not less than 88 per cent net to the Railway Administration.

13. The corporation is hereby authorized to issue to subscribers to the loan bonds for the total amount of the loan in pounds sterling, in such form and for such amounts as shall appear desirable to the corporation, and the Minister for China in London will seal all such bonds with his official seal, as evidence that the Imperial Government of China is bound thereby. Each such bond shall bear the following clause: "The Imperial Government of China, pursuant to an imperial edict, dated unconditionally guarantees and declares itself responsible for the payment of the principal moneys and interest hereby secured, and in faith thereof it has specially authorized the Chinese Minister in London to seal this bond with his official seal."

14. All bonds and coupons and payments made and received in connection with this loan shall be exempt from Chinese taxes and imposts forever.

15. All details necessary for the prospectus and connected with the service to the bondholders on the interest and repayment of principal of this loan, not herein explicitly provided for, shall be left to the arrangement of the corporation, who are hereby authorized to issue a prospectus of the loan as soon as possible after the signing of this agreement.

The Tsung Li Yamen will instruct the Chinese Minister in London to cooperate with the corporation in any matters requiring conjoint action.

16. The loan shall be issued to the public as soon as possible after the signing of this agreement, and shall date from the first of the month of its issue. Payment of the entire proceeds will be made in London to the order of the administrator general not later than March 31, 1899; of the above proceeds the corporation will advance to the order of the administrator general in London, on or before October 31 next, the sum of £250,000; this advance will bear interest at the rate of 5 per cent per annum until such time as the first installment of the loan proceeds shall be available, when it shall be deducted from those proceeds by the corporation.

17. In the event of an unfavorable state of the market rendering the issue of this loan, and the payment of its proceeds to the Railway Administration, impossible on the terms named without loss to the corporation, the corporation shall be granted

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